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Profit Sharing Agreements in Decentralized Supply Chains: A Distributionally Robust Approach
Qi Fu1; Chee-Khian Sim2; Chung-Piaw Teo3
2018
Source PublicationOPERATIONS RESEARCH
ISSN0030-364X
Volume66Issue:2Pages:500-513
Abstract

How should decentralized supply chains set the profit sharing terms using minimal information on demand and selling price? We develop a distributionally robust Stackelberg game model to address this question. Our framework uses only the first and second moments of the price and demand attributes, and thus can be implemented using only a parsimonious set of parameters. More specifically, we derive the relationships among the optimal wholesale price set by the supplier, the order decision of the retailer, and the corresponding profit shares of each supply chain partner, based on the information available. Interestingly, in the distributionally robust setting, the correlation between demand and selling price has no bearing on the order decision of the retailer. This allows us to simplify the solution structure of the profit sharing agreement problem dramatically. Moreover, the result can be used to recover the optimal selling price when the mean demand is a linear function of the selling price (cf. Raza 2014) [Raza SA (2014) A distribution free approach to newsvendor problem with pricing. 4OR—A Quart. J. Oper. Res. 12(4):335–358.].

KeywordCompletely Positive Program Distributionally Robust Planning Profit Sharing Agreements Decentralized Supply Chains
DOIhttps://doi.org/10.1287/opre.2017.1677
Indexed BySCIE ; SSCI ; SSCI
Language英语
WOS Research AreaBusiness & Economics ; Operations Research & Management Science
WOS SubjectManagement ; Operations Research & Management Science
WOS IDWOS:000427717400013
PublisherINFORMS, 5521 RESEARCH PARK DR, SUITE 200, CATONSVILLE, MD 21228 USA
Fulltext Access
Citation statistics
Cited Times [WOS]:7   [WOS Record]     [Related Records in WOS]
Document TypeJournal article
CollectionFaculty of Business Administration
DEPARTMENT OF ACCOUNTING AND INFORMATION MANAGEMENT
Corresponding AuthorQi Fu
Affiliation1.Faculty of Business Administration, University of Macau, Taipa, Macau, Macau
2.Department of Mathematics, University of Portsmouth, Portsmouth, PO1 3HF, United Kingdom
3.NUS Business School, Institute of Operations Research and Analytics, National University of Singapore, Singapore, 119077, Singapore
First Author AffilicationFaculty of Business Administration
Corresponding Author AffilicationFaculty of Business Administration
Recommended Citation
GB/T 7714
Qi Fu,Chee-Khian Sim,Chung-Piaw Teo. Profit Sharing Agreements in Decentralized Supply Chains: A Distributionally Robust Approach[J]. OPERATIONS RESEARCH,2018,66(2):500-513.
APA Qi Fu,Chee-Khian Sim,&Chung-Piaw Teo.(2018).Profit Sharing Agreements in Decentralized Supply Chains: A Distributionally Robust Approach.OPERATIONS RESEARCH,66(2),500-513.
MLA Qi Fu,et al."Profit Sharing Agreements in Decentralized Supply Chains: A Distributionally Robust Approach".OPERATIONS RESEARCH 66.2(2018):500-513.
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